Analysts see the writing on the wall for the fate of the internal combustion engine (ICE), causing passenger car and heavy-duty motor oil (PCMO/HDMO) makers and their base oil suppliers to consider the implications for the lubricant industry.
It’s far too early for anyone to panic. Though the pressure is on to innovate ways to reduce the environmental impact of ICEs, the tipping point into electric vehicle (EV) dominance is still several years away.
But signs do indicate that this transition is a question of when, not if. Every PCMO/HDMO maker needs to start thinking seriously about how it can best serve the automotive industry of the future, and how its base oil supplier can support the evolution.
The Rise of EV Will Bring Challenges
“Adapting to EVs is going to be a challenge that will affect a significant portion of the (lubricant) industry …” – Nathan Shipley, Executive Director and Industry Analyst, NPD Group
California ICE Ban
The California Air Resources Board announced a ban on the sale of ICE vehicles by 2035, and as California goes, so may the rest of the U.S. soon after.
So the clock is now officially ticking. This may force many lubricant makers to accelerate the timeline to formalize a pivoting strategy.
Brand Evolution
The more immediate challenge is the consistent pressure from consumers, investors, governments, and intergovernmental organizations to improve the sustainability of lubricant development.
For example, the United Nations is endorsing biolubes for all categories from industrial lubricants to PCMO as a stopgap measure on the way toward an EV future. This presents a significant challenge for conventional and synthetic brands.
Lack of EV Specifications
Even brands that are interested in pivoting to EV fluids now face the challenge of moving targets for new product specifications.
It will be technologically challenging for ICE lubricant brands to innovate around the very different needs of the electric motor, from conductive greases to specialized transmission and cooling fluids.
An EV Future Will Bring Opportunities, Too
“… But it’s also an incredible opportunity; What else can your brand become besides just being an oil company?” – Nathan Shipley, Executive Director and Industry Analyst, NPD Group
New Product Lines
Lubricant brands that are addressing the sea change now stand to reap the benefits of leading the market in late-stage, eco-friendly ICE lubricants.
In the near future, refined API Group III base oils will be among the best options for ICE fuel economy and lower emissions without sacrificing performance.
New Markets
In an already crowded field, it will become more difficult to stay competitive if and when PCMO & HDMO demand begins to drop.
The converse may also be true. Those who embrace the growing EV market to come may find greater profitability in future EV fluids than in conventional lubricants today.
Taking the Lead
Brands that are investing in R&D now are poised to help set tomorrow’s standards for EV fluid specifications, positioning themselves to own the market.
Embracing the future is a powerful story. Being a part of making that future is even better, and this is where an experienced base oil supply partner like Signal Fluid Solutions can help.
Signal Fluid Solutions: An Innovative Base Oil Supplier & Partner
For four decades, we have worked closely with our customers as more than suppliers of traditional base oils and specialty oils. We are consultants eager to help you strategize, innovate, become more profitable in your market, and enter new ones.
The transition from internal combustion engine dominance to an EV future is a challenge we face together with our customers in PCMO/HDMO. The Signal Fluid Solutions team works tirelessly to keep our partners in every market we serve at the forefront of their industries.
These are just a few examples of the ways we help our partners innovate:
- Today, we support lubricant makers as a leading supplier of leading-edge NEXBASE Group III base oils throughout the U.S. to support lower emissions.
- We’re also helping automakers reduce VOC (volatile organic compound) emissions from interior moldings through the use of very high-viscosity process oil (Renoil 2400-LV).
- We’ve developed a variety of agricultural oils, including a crop spray oil for pest control approved for use in organic farming operations (PSO 70).
The list goes on, but the main takeaway for lubricant makers is that Signal Fluid Solutions has the expertise and eagerness to innovate alongside you, whatever the future brings.
So, if you’re worried about how your industry will fare in the EV world to come, let’s talk.
